Limited liability explained: the protection incorporation gives you

What limited liability means

Limited liability means your company is a separate legal person that owns its own debts. If it cannot pay them, creditors look to the company, not to you. Your personal loss is capped at what you invested plus any unpaid share capital — the founding promise of the limited company.

Why it matters when borrowing

When a company takes on debt, limited liability is what keeps that debt from becoming yours. A loan to the company, assessed on the company, and not personally guaranteed, sits entirely behind this shield. It is why the structure of a loan matters as much as its price.

Where the shield can be pierced

Limited liability is strong but not absolute. A personal guarantee deliberately sets it aside for a specific debt. Wrongful trading or fraud can also expose directors personally. Managed honestly and without guarantees, though, the protection holds.

Keeping the protection intact

Preserve the shield by keeping company and personal finances separate, meeting your director duties, and avoiding personal guarantees where you can. A no-PG loan lets the company borrow without piercing it — see personal guarantees explained.

Borrow behind the shield

Keep company debt with the company and your protection intact.

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.